Trade Promotion Marketing and Optimization, with other news and commentary for channel professionals

Saturday, June 21, 2008

Fila: Resurrecting a brand

Fila seems to be a hot brand in South Korea, fueled by endorsement ads by Paris Hilton:

... Paris Hilton makes a splash in conservative South Korea. In ads for Fila, the sportswear brand, Hilton strikes a fetching pose in a belly-baring $180 white tracksuit. Hilton, who is reportedly paid $1 million a year to endorse Fila in Korea, prances around in teeny tennis togs in a TV commercial. Off camera she recently acquired a pooch she named "Kimchi" after the spicy Korean dish, a gesture that delighted her fans--and Fila brass.

Korea accounts for almost three-quarters of Fila's worldwide sales, however. In the US, the brand has dropped from $687mil in sales a decade ago to $61mil last year. Fila was once the #3 sports shoe brand in the US, and its downfall was related in part to legal problems involving accounting for payments to retailers.

... the Securities & Exchange Commission charged him with fraud for helping the vendor inflate its earnings. Epstein, the sec charged, signed documents stating that Fila owed $1.38 million to now defunct Just for Feet, a Birmingham, Ala. retailer.

The current ownership blames the downturn largely on an effort to go up-market: "Chasing luxury for us was not meaningful." The boss has cut costs, closed company stores (only one remains open, in New York, because they can't break the lease), and are now trying to re-establish the brand in the US:

The new focus: selling workout sneakers and apparel through a number of mass-market retailers, including Foot Locker and Kohl's.

Worldwide, they have what sounds like an interesting approach:

Yoon aims to inspire licensees in Europe, the Middle East, Africa and Latin America to put more energy into brand building by giving them ten-year rolling contracts in which they pay only a small portion of the expected royalties up front. Yoon believes the longer contracts encourage licensees to spend more money marketing.

Good luck, Fila. I like the emphasis on the long-term and on marketing.